Businesses urged not to cut back on pension payments

The UK Pensions Regulator has advised businesses not to cut back on pension contributions as a result of the current economic downturn.

In a statement to employers, the watchdog acknowledged that current economic conditions are of real concern to employers, and advised that those employers who sponsor final salary pension schemes need to be 'reassured that the current scheme funding regime is flexible enough' to cope with the impact of an economic downturn.

The Regulator is calling on for all unsecured creditors to be treated equitably, and warns that pension schemes should not be disadvantaged.

David Norgrove, Chairman of the Pensions Regulator, said, 'There is no reason why a pension scheme deficit should push an otherwise viable employer into insolvency. But the pension scheme recovery plan should not suffer, for example, in order to enable companies to continue paying dividends to shareholders'.

Employers who are concerned about an existing recovery plan are advised to discuss the matter with their pension scheme trustees.